DISTELL FACING DISPOSAL RULE

Published: 23 July, 2008

Distell, the South African group formed two years ago out of the merger between Stellenbosch Farmers' Winery and Distillers Corporation, claims that South Africa's Competition Commission's recommendation that Distell dispose of some brands before the merger can be recommended undermines the company's growth potential. The conditions they now propose are totally unrealistic,' said Distell's managing director, Jan Scannell. The main reason for the merger was to improve Distell's capabilities to compete successfully in a highly competitive global arena. Major breakthroughs have already been achieved and we are well on our way to becoming a leading South African force in global beverage markets,' he said. However, the commission's current proposal will undermine our potential to grow successfully in these markets.' It is significant that the only intervention in the merger has come from foreign competitors. These multinationals, which in some cases dominate categories in their local and some international markets, are likely to be strong bidders for brands which Distell may be forced to sell. This will lead to the ownership of successful South African brands moving offshore.' The tribunal will hold a formal hearing and is expected to rule within a few months